Do you want to cut development costs without sacrificing quality?
Offshoring software development has grown in favor as companies worldwide search for methods to save expenses and increase productivity. This approach lets businesses outsource their software development chores to nations with less expensive trained workforces. Apart from the financial benefit, this opens access to a larger talent pool.
The year 2025 will present ways to enhance efficiency and effectiveness, in the dynamic world of outsourcing. Whether one decides on keeping operations in-house or decides to render outsourcing to a promising client, everything can be achieved if the recommendations and guidelines are implemented directly.
Offshore outsourcing is still going strong and demand for offshore software development is growing at a rapid pace. That’s not just talk!
The global offshore software development market is valued at $122 billion in 2024 and is expected to reach $283 billion by 2031, growing at a compound annual growth rate (CAGR) of 10.13%. IT outsourcing market is expected to have an annual growth rate (CAGR) of 8.48%, leading to a market volume of $812.70 billion by 2029.
bestremoteteam. (2024, October 11). 5 Countries for Offshoring Software Development.
Mario Zderic. (2024, September 05). Top offshore software development trends for 2025 and beyond.
Offshore software development lets businesses:
- Lower development expenses.
- Get access to specific knowledge.
- Easy scale changes, depending on the project requirements.
- Having professionals handle technological details
What Are the Frequently Outsourced Functions?
According to a study from Mordor Intelligence, it is suggested that Application Development and Maintenance have become the most frequently outsourced functions amidst the partial IT outsourcing trends.
For application development, which is the most frequently outsourced function, 37% of organizations that outsource this function are planning to increase the amount of work they outsource. Application development continues to take larger parts of the IT budget, and many IT organizations are looking to optimize internal staffing through the selective use of outside development firms.
Maintenance ranks the second most frequently outsourced IT functions, as many businesses now need the most updated technology and flawless operations on their application. As a result, maintenance comes in and brings about many benefits such as Bug Fixation, Capability Enhancement, Performance Improvement, Scalability, and Security.
LQA. (2022, January 14). IT Outsourcing Industry: Overview, Forecasts and Upcoming Trends 2022 – 2025.
Banking, financial services and insurance is the most outsourced sector!
BFSI is the sector that accounts for the largest market share of the IT Outsourcing industry. As modern customers are now more demanding in how the services are delivered to them, businesses in the BFSI sector have come to technological applications for a more personalized and streamlined customer experience.
Moreover, the implementation of technology in customer experience not only provides top-notch customer service but also gives the businesses the tool to harness and mine the data from their customers, bringing about the great potential for business growth. Other sectors that make the list is Healthcare, Shipping & Transportation, Retail & Manufacturing.
Upcoming trends of the IT Outsourcing market
1. Remote work continues
It’s impossible to say definitively what the coming year will hold, but the steps organizations are taking give us an idea of what’s to come. Several high-profile organizations have enthusiastically embraced remote working and like it so much they’re making it the default setting.
- US insurer Nationwide has announced plans to reduce its 20 offices to four
- In 2020, Shopify announced that it is a ‘digital by default company’ and that most of its staff will permanently work remotely
- Dropbox is becoming a virtual-first company, with remote work being the default
2. Positions to be outsourced
Overall, software development will be of higher demand, with Back End developers, Front End developers, Full Stack Developers, Mobile Developers, QA Testers and UX/UI Developers being the most sought-after. However, the key technologies needed will be in Cloud computing, Blockchain, and Cybersecurity.
Outsourcing is on top of new technological advances.
Based on a recent McKinsey report on technology transformations, just 10 percent of respondents identified cost reduction as a priority. Meanwhile, 38% prioritize innovating technology to make it a competitive advantage.
LQA. (2022, January 14). IT Outsourcing Industry: Overview, Forecasts and Upcoming Trends 2022 – 2025.
As the business landscape evolves, so does outsourcing. Here are three trends that will shape the future of outsourcing by 2025:
- Increased Focus on Sustainability: Businesses are increasingly looking for outsourcing partners who prioritize sustainable practices, from energy-efficient operations to ethical labor standards.
- Enhanced Cybersecurity Measures: With cyber threats on the rise, companies will seek outsourcing partners who offer advanced encryption, secure data transfer, and robust security protocols.
- The Rise of Automation and AI: Automation and AI will play a critical role in outsourcing, with routine tasks being handled by machines, freeing up human resources for more strategic roles.
Saudi Arabia Trends in IT Market and Offshoring!
Saudi Arabia’s information technology (IT) and emerging technology (ET) market is expected to reach SAR 103 billion by 2025 from SAR 81 billion in 2022, according to the country’s Communications, Space and Technology Commission (CST).
The software market is forecast to see a compound annual growth rate (CAGR) of up to 11%, state-run Saudi Press Agency authority, citing the communications authority statement released at the Digital Technology Forum 2023 in Riyadh.
A total of 18 tech companies have been listed on the local stock market, and over 1,000 tech companies registered on the “Manassa Tech” platform, with over 150 local products.
Staff Writer, ZAWYA. (2023, October 19). I Saudi Arabia’s IT sector set to reach $27bln by 2025.
On the other side, outsourcing by businesses in Saudi Arabia is expected to reach $5.7 billion by the end of 2027 thanks to a Compound Annual Growth Rate of 10 percent, according to a new report.
Arab News. (2023, April 07). Saudi Arabia is outsourcing ‘hot spot’ thanks to Vision 2030 push: Report.
Conclusion
With the ever-changing market as of today, the IT Outsourcing industry has many things to offer with an unprecedented growth rate and potential. As technology is the core of our enhancements, IT Outsourcing is sure to boom in the future. If you want to hear more about this industry and figure out how your business can harness the potential of tech through outsourcing, please contact Tamem for further information.
Tamem has experience with IT services in many domains such as banking, insurance, retail, food and beverage, government, healthcare, etc., making us one trustworthy and professional offshoring company for businesses wanting to implement IT outsourcing.
At Tamem, we don’t just follow trends, we drive them forward. Ready to future-proof your business? Let’s dive into what’s next, together.